Expert: Gina Boykin - 10/28/2007

Question
Hello:

How much money should someone have in an IRA before considering having a managed account (paying an advisor to select investments for the account) for the IRA?

I thank you for your reply.

Answer
I can't say that there is a hard and fast rule on this.  It is really up to you on what you're comfortable with. To be honest, that is what a mutual fund manager does - selects specific stocks to be in the mutual fund investment.  That is why many people stick with mutual funds.  However, if you really want to invest in specific stocks, but you are not comfortable with selecting them, then it does not matter if you have $5,000 or $500,000 - you will be able to sleep better if you have an advisor.

Advisors can be paid in different ways though - some as a % of your account, and some as a flat fee.  If you are thinking about using an advisor, talk to a couple that are paid each of these ways and see if you think it's worth it.  You obviously don't want to pay $200 to manage a $2,000 account but for a $20,000 account, it would only be 1% of your account balance and would be very reasonable.